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Several things to note here: Amazon as a corporate investor - Of course a lot of this is a futures contract on cloud compute. This indicates how much the leade
by nibab 3y ago
Several things to note here:
Amazon as a corporate investor - Of course a lot of this is a futures contract on cloud compute. This indicates how much the leadership here thinks the compute will be problem. Money comes way cheaper outside of the big cloud providers (they also know the importance of compute and pull their leverage). This is not a sure bet. While true AGI is probably sitting behind a huge amount of compute, the “products” that are catching on right now are very much on lower end of the spectrum for required model performance. Small models are cheaper and can run on commodity compute. It’s not entirely clear to me that this is a financially sound bet..
Timing - This is an interesting time to do so. That indicates that the company feels that it’s shown some of its best work and right now is the time to bank and on that (so as to make the leap to the next big breakthrough). Openai did so on the heels of ChatGPT. This is somewhat discouraging, because outside of the context length hackery, Anthropic doesn’t have much to show as a differentiator. At best they’re a me-too startup set on the path to be acqui-hired by Amazon when the VC money subsidizing the compute drains up.
Structure/Size - there was a lot of information about the structure of the openai deal. We’re not so clear on what’s happening here. One of the big questions is valuation. Making a similar promise to openai (ie 50% of profit until 100b) would put the valuation of the company in to 10s of billions. Note that this is a very different proposition than a year ago. In navigating the “product maze” we’ve realized that there aren’t that many killer products. Most enterprises are throwing spend in this direction because the board requires you to have an “ai strategy”. At best, we’re talking about capturing all the VC money that’s going into companies with a new angle on knowledge management/search. As I mentioned above, that’s something that’s getting severely commoditized at the bottom of the market. The prospects here are pretty grim .
- kalkin 3y ago"Money comes way cheaper outside of the big cloud providers" Say more about it this? It's not obvious to me why it should be true or what evidence there is for it.
- correlator 3y agoI would think that AWS also offers a lot of distribution opportunities for Anthropic.
- nibab 3y agoIf you were to place all “available money” on a continuum, at one end of the spectrum you’d have the “dumb opportunistic money” and at the other end you have “strategic/partnership capital”. The money is very cheap if it comes from people that want to jump on the bandwagon of fomo. It’s more expensive when it comes from strategic partners that know they have something to offer (and when I say cheaper I mean literally how much $ you pay per preferred share). I would consider most professional investors in AI somewhere in the middle of this continuum. The big clouds have the rare and coveted GPUs which are the lifeline to AI companies. That gives them way better terms than what a VC firm would get.
- swamp40 3y ago> aren’t that many killer products You've got to be kidding me. Maybe for text. But what about video training neural nets? I could list killer products for days.
- nickelbob 3y agoPlease do - not trying to be snarky, just legitimately interested.
- swyx 3y agoeach of these are known >$100m opportunities: Generative Text for writing - Jasper AI going 0 to $75m ARR in 2 years Generative Art for non-artists - Midjourney/Stable Diffusion Copilot for knowledge workers - both GitHub’s Copilot X and “Copilot for X” Conversational AI UX - ChatGPT / Bing Chat, with a long tail of Doc QA startups (shameless plug from https://www.latent.space/p/agents https://www.latent.space/p/agents)
- htrp 3y ago> Generative Text for writing - Jasper AI going 0 to $75m ARR in 2 years And laying off a ton of staff in July..... the latest ARR numbers are not nearly as good.
- localhost 3y agocharacter.ai
- nibab 3y agoI think there are some killer products, but the surface area here is not that big. I can definitely see how we can improve on all of the above, but at the rate things are developing right now, you're looking at smaller and specialized models as the underlying infrastructure. Keeping the conversation focused on Anthropic, unless there is promise of some specific functions outside this range that require big powerful models, they're in trouble. There is a world in which the dust settles and the current "era" of AI doesn't actually result in a significant amount of productivity/value creation and capture thereof. Everything rests on the current assumption that emergent behaviors and some semblance of consciousness can extrapolate infinitely. You have to believe that in order to justify the investments we're currently seeing in some of the big players.